10-QPeriod: Q1 FY2019

BECTON DICKINSON & CO Quarterly Report for Q1 Ended Dec 31, 2018

Filed February 5, 2019For Securities:BDX

Summary

Becton, Dickinson and Company (BDX) reported strong revenue growth of 35.1% year-over-year to $4.16 billion for the three months ended December 31, 2018. This significant increase was largely driven by the acquisition of C.R. Bard, Inc. (Bard), which contributed approximately 33% to the revenue growth, with the remainder attributed to organic volume growth and price. Despite the strong top-line performance, the company faced increased operating costs, including higher raw material costs and amortization expenses related to the Bard acquisition, which impacted gross profit margin. However, the company generated positive operating income and a net income of $599 million, a significant turnaround from a net loss in the prior year. The company also reported healthy cash flow from operations and continued to return value to shareholders through dividends.

Financial Highlights

52 data points
Beta

Revenue

$4.16B

47.5% Gross Margin

Net Income

$599.00M

14.4% Net Margin

EPS (Diluted)

$2.05

Total Assets

$52.93B

Cash & Equivalents

$943.00M

Free Cash Flow

$78.00M

Financial Statements
Beta
Revenue$4.16B
Cost of Revenue$2.19B
Gross Profit$1.97B
R&D Expenses$258.00M
SG&A Expenses$1.07B
Operating Expenses$3.27B
Operating Income$888.00M
Interest Expense$171.00M
Net Income$599.00M
EPS (Basic)$2.09
EPS (Diluted)$2.05
Shares Outstanding (Basic)269.04M
Shares Outstanding (Diluted)274.26M

Key Highlights

  • 1Revenue increased by 35.1% to $4.16 billion, significantly boosted by the acquisition of C.R. Bard, Inc. (Bard).
  • 2Operating income grew substantially to $888 million, a strong recovery from $235 million in the prior year, despite higher operating costs.
  • 3Net income turned positive at $599 million, compared to a net loss of $136 million in the prior year's comparable period.
  • 4The company generated $245 million in cash from operating activities.
  • 5The Medical and Interventional segments showed robust revenue growth, with Life Sciences experiencing modest growth.
  • 6Long-term debt remains substantial at $17.8 billion, but the company maintained compliance with its financial covenants.
  • 7The company recognized a pre-tax gain of $335 million from the sale of its Advanced Bioprocessing business.

Frequently Asked Questions

The primary driver of the significant revenue increase was the acquisition of C.R. Bard, Inc. (Bard), which was fully integrated into BDX's results starting January 1, 2018. This acquisition contributed approximately 33% to the overall revenue growth.

While the Bard acquisition significantly boosted revenue, it also led to increased operating costs, including higher amortization expenses related to acquired intangible assets and increased selling and administrative costs. These factors, along with unfavorable foreign currency translation and pricing pressures, led to a lower gross profit margin compared to the prior year, despite the revenue growth.

At December 31, 2018, Becton Dickinson & Co. had approximately $1.0 billion in cash and short-term investments, including restricted cash. Cash flows from operating activities were positive at $245 million for the quarter, indicating sufficient resources to fund ongoing operations.

The company is involved in several product liability litigations, notably concerning hernia repair devices, pelvic mesh devices, and vena cava filters. Accruals for product liability claims were $1.7 billion as of December 31, 2018. Additionally, the company received Warning Letters from the FDA related to its Preanalytical Systems facility in Franklin Lakes, New Jersey, and its facility in Franklin, Wisconsin. While the company is working to address these issues, there's no assurance they won't have a material adverse effect.